Power To You(tube) – Why Vodafone Is Dumping Its Sponsorship Deals For Social Media

Sport is big business. Millions pay through the nose for season tickets, £60 replica shirts, poorly made scarves, overpriced beer and expensive TV subscriptions just to see how their favourite player or team fares in their latest encounter against their latest enemy. Last month BT sport paid £897 million for the right to broadcast European football in the UK for three years, highlighting the immense amount of money in the game. Advertisers have often seen sport as an opportunity to advertise their products not just to the fans, but on a global scale. For example, according to the Premier League, the companies that have their insignia emblazoned on the player’s shirts are seen by 4.7 billion people in 212 territories around the world and in return, the individual or team receives a healthy remuneration for the privilege. The symbiotic nature of this relationship is important at the highest levels, where it is almost seen as a necessity to maintain pace with sporting rivals.

However, one high profile company is looking to get out of the sponsorship game to refocus their resources on social media based advertising projects. For nearly 25 years, Vodafone has paid vast sums of money for their logo to appear at sporting events, ranging from the shirts of Manchester United to the chassis of McLaren’s Formula 1 cars. This enabled Vodafone to be associated with quality and excellence (which is painful to say, being a Chelsea fan), enhancing the value of their brand across the globe. It has also meant that fans of the teams have an emotional connection to the brand. This high level of sponsorship has correlated with vast growth and profits, with Vodafone boasting the fourth highest market capitalisation in the FTSE 100 index; an estimated £83 billion.

This is not a snap decision. Vodafone’s analysts will have absorbed all possible information, analysed every alternative and ran every possible outcome. It will have decided that sponsorship, regardless of whether it is still beneficial in generating revenue, does not, in the strictest business sense, suggest the optimal allocation of the company’s resources. 

So what is the alternative to sponsorship? Vodafone believes the secret lies in social media. Taking a comparatively independent approach, the company announced a strategy of ‘Vodafone Firsts’, controlled by social media and focussing on “people doing remarkable things for the first time” with the use of its own technology. The first “First” announced is a multi-sensory fireworks display in London on New Year’s Eve, enabling attendees to ‘see, taste and smell’ the show. For those unable to attend the show, an augmented reality app will be released. Other “Firsts” planned involve “a revolutionary approach to conducting an orchestra”, sportswomen helping to protect some of the world’s vulnerable women and a professional surfer achieving a lifelong ambition.

As the number of social media users reaches the billions, with that figure set to rise as the infrastructure of developing nations improves, will other companies follow the trail set by Vodafone by abandoning their sponsorship of sport? What role will social media play in connecting Vodafone to its target audience under the new “Vodafone Firsts” strategy? Are costly sponsorship deals the most cost effective way of expanding a company’s global presence? At this stage, there seems to be more questions than answers, but what is certain is social media will play a key role in future advertising strategies of both blue chip and regular companies.

Joe Oliver

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